Wall Street Str...'s  Instablog

Wall Street Strategies
Send Message
Wall Street Strategies has been providing independent stock market research since 1991 to individual, retail and institutional clients through a balanced approach to investing and trading. Charles Payne, our founder and chief analyst, is routinely sought after for his stock market, political,... More
My company:
Wall Street Strategies
My book:
Be Smart, Act Fast, Get Rich
  • Sorry My Dear By Charles Payne 0 comments
    Nov 30, 2012 9:43 AM

    Isn't it rich, aren't we a pair
    Me here at last on the ground - and you in mid-air
    Send in the clowns

    Isn't it bliss, don't you approve
    One who keeps tearing around - and one who can't move
    But where are the clowns - send in the clowns

    Just when I stopped opening doors
    Finally finding the one that I wanted - was yours
    Making my entrance again with my usual flair
    So sure of my lines - then nobody's there

    Don't you love a farce; my fault I fear
    I thought that you'd want what I want - sorry my dear
    But where are the clowns - there ought to be clowns
    Maybe next year

    -Stephen Sondheim

    I read that Senator Mitch McConnell burst into laughter upon hearing Treasury Secretary Tim Geithner lay out President Obama's "Fiscal Cliff" plan. Here's the rub:

    > $1.6 trillion in revenue
    > $50.0 billion stimulus
    > $400.0 billion in Medicare cuts

    Unlike Susan Rice, who was sent in to fall on the administration's sword during the Benghazi cover up, Geithner isn't looking for his next government job. It makes him the perfect foil. He can actually go in with a straight face with a proposal so absurd that an old reserved guy like McConnell doubles over in hysterical disbelief. Some say this is how you begin negotiations, and they would be right if this were November 2011. The fiscal cliff countdown clock is a couple ticks from midnight.

    We might all love a farce when viewed from afar, but a tempest in a teapot is dangerous when we all live in that teapot. So, when the administration keeps talking as if they think the GOP really wants what they want, then we should all feel sorry for ourselves.
    As much as they routinely win the public relations war, their effort on this has been far from compromise and far from reality. The democrats keep tearing, but at least republicans have finally begun to move. For the general public, it's all the same - send in the clowns.

    Yes, this is rich, because it's all going to make the nation poorer. Nonetheless, this is the path we are on. So, there will be some form of pain; some form of anti-free market pain that hurts the poorest Americans by limiting their future. This is the path chosen by a slight majority of people that never crunched the numbers, and more than finding or creating their own opportunities, agreed taking money from moderately successful citizens and small businesses is the path to glory. It will never be bliss, and no, I don't agree.

    Still, there are lines that must be drawn. The opening salvo from Geithner would be laughable if not so goofy and ill-timed. Let's stop messing around. Here's what the White House will get:

    * Extension of (ultra) long term unemployment benefits
    * Extension of payroll tax holidays
    * Taxes on carried interest

    Here's what the White House will not get:

    * $50.0 billion stimulus
    * Higher taxes on small businesses
    * Permanent end to debt ceiling


    The murkier part is where tax increases will begin. I think higher taxes are a giant mistake, and those that pay are already doling out more than their fair share. But, going down this road, I hope the line moves to $1.0 million. I also think mortgage interest deductions will be altered or tossed out along with charitable deductions but only with real reform to entitlements.

    Real entitlement reform has to go into effect at the same time as tax hikes and defense spending cuts.

    I must say, yesterday when I heard John Boenher mention "framework" for a plan to deal with a solution later, the hair on the back of my neck stood on end. That is a euphemism for kicking the can down the road. Obviously, that's a giant mistake. Problems don't stop mounting. Debt doesn't stop mounting. The real cliff that comes with us eventually forking over $1,000,000,000,000 a year in interest gets closer.

    Gutless politicians on both sides have brought us to this point. Politicians are asking Americans to buy "framework," not knowing if eventually it will house a Caravaggio or velvet painting of card-playing dogs.

    But where are the clowns - there ought to be clowns
    Maybe next year

    Impact of Buffett Tax
    (click to enlarge)

    A new report says the fair share tax revenue support by Warren Buffett would pull in only $8.0 billion a year. The chart is from JP Morgan says it all.

    Gross Domestic Product

    Officially, third quarter economic growth was revised higher to 2.7% from 2.0%.

    I have to say, the headline number really masked an economy that is crawling along barely keeping its head above water. While it speaks to the resolve of the economy and underscores it's built to last already, beneath the surface the numbers were disturbing.

    Inventories were much higher, revised from initial reading of $34.1 billion to $61.3 billion - good, but not likely to recur. In the mean time, real consumption was lowered to 1.4 from the original read of 2.0 and business investment in things like equipment and software is down substantially to -2.7% from unchanged. This was the lowest read on business investment since second quarter 2011 and down sequentially.

    Inventory builds speak mostly to the auto market and made the difference in the overall revision. Economic trends that speak to the future were a major disappointment.


Back To Wall Street Strategies' Instablog HomePage »

Instablogs are blogs which are instantly set up and networked within the Seeking Alpha community. Instablog posts are not selected, edited or screened by Seeking Alpha editors, in contrast to contributors' articles.

Comments (0)
Track new comments
Be the first to comment
Full index of posts »
Latest Followers


More »

Latest Comments

Instablogs are Seeking Alpha's free blogging platform customized for finance, with instant set up and exposure to millions of readers interested in the financial markets. Publish your own instablog in minutes.